AGT
Vietnam Phoenix • Newsletter October 2019
Trading activity was limited over the month. AGT received a distribution of £8m from Vietnam Phoenix (1.8% of NAV) following the sale of key asset Greenfeed.
Trading activity was limited over the month. AGT received a distribution of £8m from Vietnam Phoenix (1.8% of NAV) following the sale of key asset Greenfeed.
Detractors from returns included Vietnam Phoenix, where the
discount widened out materially on selling pressure. Vietnam
Phoenix is an illiquid OTC-traded closed-end fund in wind-up,
and will return the proceeds from its portfolio as and when its
investments are sold. Discount widening was also seen at Third
Point Offshore Investors, which now sits on a discount of 23% to
our estimated NAV. There are many levers available to the
Board to tackle the discount which, at the time of writing, remain
resolutely un-pulled. We will continue to engage with the Board.
The last of these detractors, VPE,
was a spin-off from our successful investment in Vietnam Phoenix (fka DWS
Vietnam). VPE’s main asset is its 18% stake in Greenfeed, an animal feed
company which accounts for 34% of its NAV. Greenfeed was marked down
by -16% in VPE’s Jun-17 NAV as the impact of China’s temporary ban on
pig imports from Vietnam weighed on pork prices. Estimates suggest that
around 55% of total industry animal feed is sold to pig farms. However, to
the extent the fall in pork prices has led to smaller feed producers dropping
out of the market, the situation could be positive for Greenfeed over the
medium term. China’s ban on pork imports was actually lifted in July and
pork prices now stand at VND40k-VND49k per kilo, up from an average of
VND25k per kilo over the last three months. We estimate Greenfeed is
carried very inexpensively in VPE’s NAV, particularly given its track record of
growing earnings and its strategic positioning.
Our investment in Vietnam Phoenix Fund was restructured at year-end into
an open-ended fund (two-thirds of our position) that will realise its
investments over the next three months and return cash to shareholders
along the way, and a closed-end fund housing the private equity assets that
should do the same over the next two years. Better Capital 2009 was a
valuable contributor despite, as one of our few UK-focussed investments,
not directly benefitting from the sharp fall in the Pound post-BREXIT. The
sale of its key asset Gardner Aerospace, if completed, will add further
upside to a position that has already generated a 27% IRR over the life of
the investment and should lead to a distribution of an amount not much
lower than Better Capital 2009’s current market cap.
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As a result of money laundering regulations, additional documentation for identification purposes may be required when you make your investment. Full details are contained in the relevant subscription documents.
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For your protection, we require the use of encryption technologies for certain types of communications conducted through this website. While we provide those technologies and use other reasonable precautions to protect confidential information and provide suitable security, we do not guarantee or warrant that information transmitted through the Internet is secure, or that such transmissions will be free from delay, interruption, interception or error.
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AVI Global Trust – General Risk Factors
AVI Global Trust plc is a public company listed and traded on the London Stock Exchange.
Past performance should not be seen as an indication of future performance. The price of investments and the income from them may fall as well as rise and investors may not get back the full amount invested. The trust uses gearing techniques (leverage) which will exaggerate market movements both down and up which could mean sudden and large falls in market value. Please refer to the Key Features Document for further details effecting affecting your investment.
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As a result of money laundering regulations, additional documentation for identification purposes may be required when you make your investment. Details are contained in the relevant application documents. If you are unsure about the meaning of any information provided please consult your financial adviser or other professional adviser.
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